Credit conditions are expected to remain stable across Asia despite the recent volatility spike in global markets including those in the region, Moody's said in a new report.
The rating agency said the increased market volatility has not altered its stable credit view for Asia, and that recently polled investors, intermediaries and debt issuers in the region agree with the outlook.
"The scale of correction is not yet large enough to meaningfully dampen growth. We view the recent movements in the global stock and bond markets in the context of improved growth and the inevitable normalization of interest rates in advanced economies," Moody's said.
However, the sharp market reaction highlighted the risks arising from sudden changes in market expectations of future interest rate paths in the U.S., euro area and Japan, the rating agency added.
Moody's projected 3.2% global growth for 2018, above the 2.5% to 3.0% expansion expected by most investors, intermediaries and debt issuers in Asia polled by the rating agency.
Moody's said unexpected tightening in funding conditions, geopolitical turmoil and trade protectionism are risks to its stable credit outlook for Asia.
"A China slowdown is not among the top three downside risks we see for 2018, as we expect any slowdown to be gradual and part of a carefully managed process," the debt watcher said.